“GST BILL” -THE CONSTITUTION (122 ND Amendment Bill),2014

1. “GST BILL” -THE CONSTITUTION (122ND Amendment Bill),2014 BY CA SRINIVASAN ANAND G

2. GST BILL • “GST Bill” is a misnomer for this Bill. • This Bill does not propose to introduce a law to levy GST. • This Bill proposes to amend the Constitution to: • confer concurrent taxing powers on Centre & the States to make laws to levy GST • GST will come into force only when • this Bill is passed to and • under amended Constitution the Centre & states make laws imposing GST

3. Definition of “Services” • “Services” defined by proposed new clause (26A) to be inserted into Article 366 • “Services” means anything other than goods

4. Features of GST • One indirect tax (GST) to replace a number of Central and state indirect taxes levied at present • Intention is to remove cascading effect of multiple indirect taxes • Proposed GST aims at creating a common national market for goods and services • Concurrent taxing powers to Centre & States to make laws for levying GST • GST to cover all goods/services except alcoholic liquor for human consumption

5. Central Indirect Taxes that GST will replace • Central Excise Duty • Additional Excise Duties • Excise Duty levied under Medicinal and Toilet Preparations (Excise Duties) Act,1955 • Service Tax • Additional Customs Duty (Countervailing Duty) • Special Additional Duty of Customs • Central surcharges and cesses relating to supply of goods and services • CST

6. State taxes that proposed GST will replace • State VAT/sales tax • Entertainment Tax (other than the taxes levied by local bodies) • CST (levied by the Centre & collected by States) • Octroi • Entry Tax • Purchase Tax • Luxury Tax • Taxes on lottery, betting and gambling • State surcharges & cesses relating to supply of goods & services

7. Will Central Excise Duty/State VAT go on introduction of GST? • Yes. CED to go on all goods except petroleum & petroleum products and tobacco and tobacco products .Power of Centre under Entry 84 to impose CED to be limited to these products. • State VAT to go all goods except petroleum & petroleum products & alcoholic liquor for human consumption. Power of States under Entry 54 to impose VAT to be limited to these products. • Petroleum & petroleum products will not come under GST net till a date notified on the recommendation of the GST Council. Presumably, CED/State VAT to apply on these till then.

8. Will Service tax go on introduction of GST ? • Service Tax (presently imposed by Centre) will go • Entry 92C “Tax on Services” in Union List ie List I of Seventh Schedule proposed to be omitted • All services will be under the GST net

9. Objects of the Constitution (122nd Amdt) Bill • subsuming of various Central indirect taxes and levies into GST; • subsuming of State indirect taxes into GST; • dispensing with the concept of “declared goods’ • levy of Integrated GST on inter-State transactions of goods & services; • levy of an additional tax on supply of goods, not exceeding 1%,in the course of inter-State trade or commerce to be collected by the Govt of India for a period of two years, and assigned to the States from where the supply originates; • compensation to the States for loss of revenue on account of GST for a period upto 5 years; • creation of GST Council to examine issues relating to GST and make recommendations to the Union &the States on parameters like rates, model GST laws, exemption list & threshold limits